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What The Hell Is A Startup Anyway?

From the great fireside chat between Prof. Erhan Erkut and Steve Blank on October 5, 2015 at Startup Istanbul Conference

Erhan Erkut:You said minimum viable product how do we know what’s minimal and what are the risks associated with the minimum viable product. That is one of the building blocks of the Lean Startup movement.

Steve Blank: Yeah you know this word MVP is overused but very relevant. A minimum viable product is whatever you can build to learn the most at a certain point of time and if you’re an engineer the immediate reaction is ooh I get it’s a defeatured version of the product. That’s you know some of the features are missing and that just misses the point.

That’s not what an MVP is. An MVP on day one could be a PowerPoint slide or the UI or it could be a spreadsheet with the data you’re gonna provide a customer or could be a wireframe or it could be even a conversation. An MVP changes over time and what you’re trying to do is maximize learning. It could simply be different price points it could be A/B testing of pricing which has nothing to do with the product. That is what I’m trying to do is learn about
customer segments you know revenue model, the customer acquisition costs, you know volume etcetera correct channel, right partners and so the minimum viable product is not a smaller version of the finished product it could be, it might be but most often is not.

In fact it’s almost worth reminding people what a start up is. You know when I was an entrepreneur I always thought a start-up was the things I did which was I woke up in the morning and figured out how I was going to take over the entire world if not the entire universe and that’s what a startup was. But I realized that there were a variety of definitions in Silicon Valley.

A startup is the place where you get free food and get to bring your dog but you’re not allowed to bring your children. I never figured that one out but so I came up with a definition which might be helpful.

A startup it is a temporary organization designed to search for a repeatable and scalable business model.

Erhan Erkut:That that’s really tight would you like to open that up to us.

Steve Blank:But it was designed to be like you could say to it in one sentence. So number one is I used to love startups I did eight of them, mostly because I was unemployable in a large company so I had to do startups. A startup is a temporary organization which means the goal of a startup is not to become a startup. What’s the goal of a startup? To grow, to become a large company so I put the word temporary organization just to remind ourselves that the goal is not to stay a startup. It is designed to search, boy! that’s interesting. I thought the goal of a startup is to grow and sell stuff or get sold whatever actually the goal of a start up, that early phase is to answer a bunch of questions about your business model. Big idea!

The goal in the early days is not to hire people and execute like you think you’re correct.

In fact the data says while you think you’re a visionary there’s enough data across the world now
to say you’re not a visionary you’re hallucinating. Big idea! and so therefore instead of wasting your time we want you to search for a business model, for the customers, What’s the right price? What’s the right feature set? What’s the right product market fit?

And the way I want to do this is I wanna get some evidence that this thing is the right business model and I’ll use in MVP’s to do that but I’m looking for something that’s repeatable that is I could do the same thing on Monday that works on Wednesday that works next week and scalable that means for an input of you know a 100 lira I might get 200 Lira back or for an input of a certain amount of dollars over acquire so many customers and so that’s what the definition means to start up as a temporary organization designed to search for repeatable and scalable business model.

Erhan Erkut:I think it’s worth repeating. A startup is a temporary organization in search of repeatable and scalable business model and it’s worth thinking about.

─ December 29, 2015